Draft Language on Pandemic Relief Bill Moves Forward on $15 Minimum Wage, $1,400 Payments

By:
Chris Gaetano
Published Date:
Feb 9, 2021
US_Capitol_west_side

Despite previous suggestions otherwise, draft language from House committees on the new pandemic relief package retains, among many other things, the $15 minimum wage as well as the $1,400 direct payments along with the original $75,000 threshold.

Earlier, President Biden had said it was unlikely that the minimum wage increase would be in the stimulus bill, while at the same time considering lowering the eligibility threshold for the direct payments to $50,000 for individuals. So far, though, both measures have made it through the legislative process mostly unchanged.

The House Ways and Means Committee's draft keeps the $75,000 threshold, at which point the payments taper off proportional to the taxpayer’s income in excess of the phaseout threshold over $25,000, which has the effect of making it so those with incomes over $100,000 get nothing.

The Ways and Means Committee has also inserted language that increases the child tax credit from $2,000 to $3,000 (or $3,600 if they're under the age of six) and increases its age of eligibility to 17 years old. Parents would receive half of this credit, according to the committee draft, in the form of advance payments that would be sent out every month (or as frequently as is feasible) starting July 1, with the remaining half to be claimed via their 2021 tax return. So, for example, a taxpayer with two children above age 5 would receive $500 per month (2 x $3,000/12) for each of the six months remaining in calendar year 2021, for a total of $3,000, with the reminder to be claimed on the tax return.

Meanwhile, the House Education and Labor Committee's draft increases the minimum wage to $15 over the course of four years: the language immediately raises it to $9.50 an hour, which then increases to $11 an hour next year, $12.50 a year later, $14 after a year after that and, finally, $15 a year after that.

The House Financial Services Committee has also produced draft language, which contains the resurrection of the Small Business Credit Initiative, a 2010 era law created to respond to the last financial crisis that supports state-level programs that finance small businesses. The draft language also has provisions for housing assistance and medical supply purchases.

Other committees are also drafting language for a formal bill; The Trusted Professional will provide updates as they become available.

Practitioners who want to get a better handle on the CARES Act, the previous major pandemic aid package, can attend the Foundation for Accounting Education's New York State Tax Implications of the Federal CARES Act Webcast Replay, which will be held on  Feb. 11 and Feb. 16.

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